ECB could hit inflation target by late 2018, early 2019 -Draghi

European Central Bank (ECB) President Mario Draghi leaves an elevator after a meeting with German lawmakers in Berlin, Germany, September 28, 2016.
REUTERS/Axel Schmidt

WASHINGTON Euro zone inflation could approach the ECB's target by late 2018 or early 2019 and so far there is no evidence that super-easy monetary policy is leading to asset price bubbles, European Central Bank President Mario Draghi said on Saturday.

Speaking at the International Monetary Fund's annual meeting, Draghi added that he also saw no evidence that low inflation has become embedded in wage setting, a big fear for policymakers as low wage growth could perpetuate low inflation.

"By year end or the first months of next year, (inflation) should pick up and move towards 1 percent, and later on, above 1 percent, essentially due to the base effect of energy prices," Draghi told a press conference.

"Thereafter the inflation rate would continue to increase... towards our objective to be reached by the end of the forecast horizon, 2018 or the beginning of the year after," he added.

The ECB has undershot its inflation target of nearly 2 percent for three and a half years, raising concern that its policy may lose credibility as businesses and households lose faith in its policy moves, making its job even harder in the future.

Its big fear is that after years of inflation target misses, businesses lose confidence in its ability to deliver on its mandate, lowering the pace of their wage increases and embedding low income growth.

Draghi added that euro zone growth has appeared to stabilize and he sees growth holding steady at the current rate for the rest of the year.

Still, the outlook faces downside risks, primarily from geopolitical risk and lower-than-projected growth in world trade.

While admitting that its policies carry risks and negative side effects, Draghi said he saw nothing that could be characterized as asset price bubbles.

BATON ROUGE, La. U.S. President-elect Donald Trump on Friday said that China and other countries often devalue their currencies as the U.S. economy improves, vowing to combat currency manipulation and the dumping of foreign products into U.S. markets below cost.

President-elect Donald Trump said on Friday he would name Andrew Liveris, chairman and chief executive of Dow Chemical Co, to head the Manufacturing Council, a private sector group that advises the U.S. secretary of commerce.